Power Failure: the tragedy of Australian climate politics

power failureThe book Power Failure about Australia’s intransigence on climate change was a personal mission for journalist Philip Chubb. Chubb lived with his family at Cottles Bridge near Melbourne and watched year after year as the summers got hotter. On Saturday, 7 February 2009 he stood in record-breaking heat with fire plan in hand hoping the blaze would not come over the hill and kill his family. They were lucky but Chubb’s closest friends died as they hid under the kitchen table, and it seemed obvious to him changes in the climate had fuelled the intensity of the fire.

But the reaction to Black Saturday showed there was still divisions and fears, played up by the likes of News Corp columnist Miranda Devine who said it wasn’t climate change but habitat protection promoted by environmentalists that caused the fires. Devine said “Greenies” should be “hanging from lamp-posts” for their ideology which prevented “landowners from clearing vegetation to protect themselves.” Devine could have been dismissed as a lunatic outlier, but she carried a big megaphone which her employers News Corp were more than willing to lend to anyone who muddied the waters when it came to climate change science.

The Prime Minister Kevin Rudd had recognised climate change as a national emergency when he won what some regarded as the world’s first climate change election in 2007. Many surveys showed seven out of ten people saying climate change would impact their vote. Rudd spoke of great moral challenges and pledged to reorganise the national economy around new energy industries. He introduced an emission trading scheme and appointed Ross Garnaut to examine the economic impacts and recommend a framework. It seemed as though intelligent and non-partisan debate about climate change had become the norm.

It wasn’t an easy problem to solve. The Australian Public Service Commission defined climate change in economic terms as a “wicked problem” – a pressing and complex issue involving many causes and much disagreement about possible solutions.  Australia’s reliance on fossil fuel worsened the problem with four out of five power stations running on coal, making the nation the world’s biggest per-capita greenhouse gas emitter. Private companies making money from fossil fuel industries also had a vested interest in climate policy failure over 25 years.

In 1990 the Bob Hawke government developed Australia’s first climate change policy aiming to stabilise emissions but not at the expense of the economy. Then in 1996 John Howard rolled back even these modest goals refusing to ratify the Kyoto Protocol and overriding advice to bring in emissions trading in 2003. Howard’s position was finally repudiated by the electorate in 20007. Post Black Saturday Rudd had the opportunity to go on the front foot. Chubb’s book forensically examines how that unravelled over the four years that followed leaving Australia further adrift than ever on effective climate action.

Many of the problems were of Rudd’s own making and his character flaws are discussed in detail in Wayne Swan’s autobiography. Rudd’s authoritarian leadership style led to deep dysfunction in many areas of government including climate change. Policy making was the preserve of the troika of Rudd, Swan and Penny Wong but with Swan absorbed in the financial crisis, Rudd and Wong were the only ones who fully understood Labor’s climate change policy. There was little or no inter-departmental or stakeholder consultation and most cabinet ministers were well out of the loop as power concentrated in the Prime Minister’s Office.

Rudd and Wong also kept the voters out of the loop as the policy took shape. The early enthusiasm for change dissipated in an information vacuum, crucially robbing Labor of using the threat of an early election to resolve a political impasse.  As the passion for action dulled in the absence of an information campaign, the Opposition hammered away to create doubt and weaken resolve while affected companies warned of loss of jobs and an investment freeze. The year dragged on in arguments over compensation to polluters, eventually agreed at an astonishing $7.3 billion, that the companies still weren’t happy with.

As 2009 advanced, Rudd had a pressing need to use his phenomenal personal popularity to lock in public support for climate action, but he said nothing on the issue. Nor was he open about the impact of carbon pricing on the cost of living. Because the community had stopped hearing about the issue, they started questioning its importance and whether it was worth paying for. Rudd had squandered consensus. Between 2008 and 2010 Newspoll showed an 11% drop in belief in climate change and by 2011 the proportion of Australians opposing action with significant costs had doubled. The breaking of the drought in 2009 also contributed to change in public perception with many equating climate change with a lack of rain.

Having abandoned the public, Rudd put his trust in the parliamentary opposition and global action at the 2009 UN climate change conference in Copenhagen. He would lose both battles. Rudd’s parliamentary failure was entirely his own fault. He wanted to pass his legislation in the Senate with the help of Opposition leader Malcolm Turnbull. But he also played wedge politics against Turnbull and Liberal moderates which eventually saw Opposition climate sceptics grab power in the party room. By then Rudd had alienated the Greens so there was no plan B.

The clumsily-named Carbon Pollution Reduction Scheme first hit the Senate in mid-2009 when Turnbull was still in charge. Turnbull held the line the legislation was hasty and pushed for delay. The Opposition voted against it but Turnbull was worried about fighting a climate change election so he promised to negotiate later in the year. By then Barnaby Joyce was openly calling the CPRS a ‘great big new tax on everything’ and said the Sunday roast would cost up to $150.

This simple scare campaign was inaccurate but devastating as the government had never conceded there would be any cost of living increases. Turnbull’s party room was openly grumbling about giving the government any support on climate change. Among them was Tony Abbott who told a September 2009 meeting in Beaufort, Victoria that climate change was “absolute crap”. The speech went down well with his older rural audience. Abbott would later say this was not his “considered opinion” but also admitted this meeting convinced him to act against the policy.

In November Penny Wong and Ian Macfarlane finally began negotiations on the CPRS. The resulting deal was good for the big polluters. The LNG industry got a top-up allocation of permits, the coal industry’s handout was doubled, there were more handouts to electricity generators, steelmakers and other manufacturers and the global recession buffer was extended to 2020. Turnbull was delighted with the result, but his party room was not. There was a spill on December 1 and Turnbull lost to Tony Abbott by one vote. Abbott immediately reneged on the deal and the climate consensus was finished.

Initially Rudd’s office was delighted by the result thinking Abbott would shoot himself in the foot. But he pushed hard on the simple message of the ‘great big new tax’ saying emissions could be reduced by other less costly means. Meanwhile Rudd’s hope of getting the Greens onside were destroyed by what was given away in the Wong-Macfarlane compromise. The CPRS was defeated a second time in the Senate in December 2009 despite two Liberal senators crossing the floor.

Rudd went off to Copenhagen undaunted, convinced by his ability to knock together world heads. The conference was chaotic to the point of anarchy with many different alliances and divisions at work. Rudd told delegates a grand bargain was within their grasp but no one was listening, and the conference ended without agreement. An emotionally drained Rudd blamed “Chinese fuckers” for trying to “ratfuck us” but it would be Rudd himself that would end up “ratfucked” in 2010.

Abbott began his onslaught buoyed by the failure of the summit and the release of hacked emails of climate scientists that sceptics gleefully suggested the environmental threat was exaggerated. Unable to openly embrace the sceptics, Abbott developed “direct action” to reduce emissions. Rudd became paralysed by doubt at the prospect of calling a double dissolution election based on the Senate’s refusal to pass the CPRS. He gave the impression to his supporters he would call the election in January so many staffers cancelled holidays to work out a campaign. Rudd’s supporters later claimed Julia Gillard talked him out of that election though Gillard said it was Rudd’s idea.

By Australia Day Rudd had abandoned the election idea and was instead promoting his health reforms. In early 2010 UK climate sceptic Chris Monkton toured Australia, garnering public legitimacy through blanket media coverage. Abbott met Monckton and later parroted some of his views. Rudd was nowhere to be seen. Instead he looked at an abatement plan that was suspiciously similar to Abbott’s direct action and just as useless in meeting serious targets. But this “Abbott lite” plan did give him an excuse to indefinitely delay the CPRS. The decision was leaked to the media in April and Rudd publicly admitted it was pushed back to 2013 unless there was “credible action” in China, India and the US.

The impact was disastrous and immediate. The Coalition had their first lead in the polls in four years and Rudd’s personal approval rating dropped 15 points. The disaffection quickly spread to the party room tired of a command and control leadership style that had little substance. By 24 June, he had vacated the leadership without a fight. Julia Gillard took the reins without explaining to the public the darkness at the heart of government leaving Rudd to successfully play a martyr role for the next three years.

Gillard’s immediate poll numbers were encouraging but it was a short honeymoon. On climate change Gillard pushed to restore consensus with a citizens’ assembly. The idea was ridiculed as “a giant focus group” and an excuse for inaction. Climate change did not feature much in the 2010 election. Abbott reiterated his doubt of climate science while Gillard publicly ruled out a carbon tax. The campaign was a disaster for Labor as Rudd camp leaks constantly undermined any momentum. The election produced a hung parliament and a tug of war for the balance of power.

Labor signed a formal alliance with the Greens which was widely derided though Gillard felt it would provide momentum for negotiations with the other independents and have constitutional weight with the governor-general. The decision spawned outright war in the Murdoch media stable against the government, a war which would not cease until the next election. Andrew Wilkie signed up with Labor leaving the decision of government with independents Rob Oakeshott and Tony Windsor. Despite being former Nationals the pair cared deeply about climate change and consulted with Garnaut and Nicholas Stern to work out their position. They agreed to go with Gillard demanding a re-examination of the carbon price, an updated Garnaut Review and a productivity commission study of international action on emissions reduction schemes.

Gillard appointed a Multi-Party Climate Change Commission (MPCCC) but the Opposition did not sign on. The MPCCC made good progress and within six month came up with the framework for the Clean Energy Future package. But a leak in February 2011 would change everything. The Australian revealed Gillard would introduce a carbon tax in 2012 and an ETS in 2015. Gillard and Bob Brown formally announced a fixed carbon price would begin on 1 July 2012. Gillard told parliament Australia had to put a price on carbon early to manage inevitable change. Abbott called the carbon price a tax and said he would campaign constantly against it. Later that night Gillard went on ABC’s 7.30 where she could have described the new fixed price as a charge on the country’s biggest polluters. Instead she admitted she was happy to call her “market-based mechanism to price carbon” a tax. The damage was done, Gillard had lost the next election there and then.

Immediately the Opposition went on the attack calling Gillard a liar and the reputational damage was irreparable. Gillard was stuck in a losing battle of semantics reflected in abysmal polls that lasted the full term of her government. The Opposition colluded in a very public campaign of intimidation that bordered on violence. It legitimised scepticism in a scare campaign with five parts: unimaginable price rises, huge power bill rises, the destruction of coal, steel, cement, aluminium and motor industries, thousands of job losses, and the death of regional towns.

The media went along for the ride constantly calling out the negative impacts of the carbon price. When Cate Blanchett advertised support of carbon pricing, she was lampooned in the press for a week as a “pampered star” and “Carbon Cate”. Despite the ferocity of the attacks, the government said nothing. Gillard was making the same mistake as Rudd: ignoring the voters while the details were being thrashed out. Gillard’s silence was deliberate, she didn’t want to antagonise support in the MPCCC but the effect was the same: public disdain. Her approval rating plunged to 17%, equal with the worst rating of Paul Keating.

The government was in dire straits but took heart in the electorate’s suspicions over Tony Abbott. What they could not deal with was the return of Kevin Rudd. Rudd’s backers asserted Labor could still win the next election with him at the helm. Despite the mayhem, the Government introduced the Clean Energy Fund in June 2011 and Gillard successfully marshalled it through parliament. The carbon tax would be introduced a year later at the European price of $23 a tonne giving the electorate 12 months of “lived experience” of carbon pricing before the election. Labor also gave $10b over five years to a new Clean Energy Finance Corporation, a green investment bank idea borrowed from the UK.

Finally the government gave thought to the communication strategy. Its research said to avoid explaining climate change or justifying carbon pricing. Instead they were going to immunise the public by paying them off. But when it came to the “lived experience” people could not easily determine if the effects were good or bad. Abbott’s claims that the world would fall in were entirely wrong but dissatisfaction remained at rising costs, with massive electricity price spikes due to rising network charges. And Gillard’s hope for “clear air” to explain the package ran into a renewed Rudd leadership challenge.

The leaks and briefings escalated in 2013 and by June the destabilisation had made Gillard’s leadership untenable. But the collateral damage was intense and Rudd and Labor were swept from office in September 2013. The summer of 2012-2013 was the hottest on record but that was of no interest to the new government. The opportunistic new Prime Minister Abbott moved quickly to axe the Climate Commission, abolish the Climate Change ministry and appoint a climate sceptic to review the Renewable Energy Target.  The victory of the sceptics, however temporary, has left the “wicked problem” of climate change as far from a solution as ever. Hopes for a consensus remain poor as long as the Abbott clique remains in power. As Chubb writes, Australia could long rue its power failures between 2008 and 2013.

Slowly recovering from Kevin Rudd

Photo credit: Andrew Meares
Photo credit: Andrew Meares

Little wonder that Tony Abbott should lead the plaudits for the retiring Kevin Rudd, as few helped Abbott to the Prime Ministership as much as his predecessor.

Rudd’s three year destablisation of the former Gillard Government eventually succeeded in ousting her from the leadership. But the damage done in the process had too greatly tarnished Labor in the public mind and the seemingly unelectable Abbott easily triumphed in September. In that election Rudd’s supporters bragged that their man had ‘saved the furniture‘ but it was his vandalism that left Labor’s tables and chairs in such a precarious place in the first place. Gillard never got the credit for her work and in tandem with Abbott and Rupert Murdoch, Rudd worked to destroy her legacy.

Rudd was always a long-term planner when it came to self interest. From the moment he was elected to parliament in 1998, he assiduously courted the media, contacting opinion editors to get his work published and going over their heads when they refused. He gained influence of a different sort when he tandem-teamed with Joe Hockey on the Seven Sunrise program for several years. He considered running as leader against Latham in 2004, defeated Kim Beazley two years later and then oversaw Howard’s End in 2007. As Prime Minister his approval ratings soared with big ticket statements such as the Apology adding to his lustre while he and Wayne Swan oversaw Australia’s interventionist response to the GFC which saved Australia from recession.

But Rudd seemed to have too many ideas that went nowhere. He started to unravel in December 2009 after he failed to bring home a climate change agreement in Copenhagen. This was the same month the domestic political consensus on climate change unravelled under new Opposition leader Tony Abbott and his right wing supporters. As Rudd flagged in the polls, word got out this was a prime minister who fretted over irrelevancies while the tumbleweeds gathered over the big decisions. Rudd was the consummate media performer – it was mastery over the airwaves that got him his huge public profile in the first place – but as Prime Minister he worked the entire government’s decision-making process into the media cycle. As Kerry-Anne Walsh said in The Stalking of Julia Gillard, Rudd took didn’t have what it took to lead a political party: “A steely and steady personality, the ability to be calm under great pressure and under the weight of extreme criticism, and consistently clear thinking.”

Most of these deficiencies were known to party colleagues from the time he ran against Kim Beazley in 2006. Yet those same colleagues knew Rudd was more popular than Beazley and backed him anyway. But by mid-2010 that popularity had finally waned and Rudd was cut loose. If anyone thought Rudd would gently stand aside and quit, they were quickly mistaken. Within weeks of his overthrow, journalists were printing exclusive inside stories of Gillard’s “bastardry”. In the lead-up the 2010 election, Gillard’s hopes of clinging to victory were undermined by a series of devastating questions from Laurie Oakes that showed intimate knowledge of what happened on the night Rudd was deposed.

In the end Gillard retained the Prime Ministership by dint of her negotiation skills with former Nationals Tony Windsor and Rob Oakeshott. Together they carved out an agreement that would ensure a minority government would last the full three years. Minority governments are common in Europe but in Australia they were considered a recipe for chaos and the Opposition aided by a friendly press continually pointed this out, despite the 43rd parliament’s good record on passing legislation. Rudd, meanwhile was never far from the action, and always ready to thrust himself back in the limelight whenever the opportunity offered itself – usually at the worst possible time for Gillard.

Early in the term, Gillard sealed her fate by agreeing to Green and Independent demands to put a fixed price on carbon. It was Abbott who declared the fixed price a tax and thus hung Gillard on her pre-election statement there would be no carbon tax. Less well remembered was the second half of that sentence: “..but let me be clear, I will be putting a price on carbon and I will move to an emission trading scheme.” It didn’t matter – from that moment shock jock Alan Jones and others could get away with calling Gillard “Juliar”. By the time of the first anniversary of Rudd’s defeat, the knives were out, both inside and outside parliament. Newspapers feverishly reported “exclusive” polls in marginal seats that showed voters were clamouring for Rudd’s return. At the last moment Rudd and wife Therese Rein cancelled what the media called an Assassination Party “for K’s former and current staff to say thank you” as Rein tweeted.

While Gillard passed the carbon pricing package with help of the Greens, Rudd stole the limelight once more with an announcement he was having heart surgery. As Walsh said Rudd knew the key to media success was “a consistent presence combined with a dash of theatre”.  So whether it was a blow-by-blow account of his ticker troubles or designing a blend of tea for a competition, Rudd would always pop up reminding people of what they were missing. The media lapped it up and ran it in tandem with Gillard’s disaster du jour and op eds that blared “Rudd was Labor’s last chance”. Yet even as Labor slipped in the polls, the caucus remained firmly behind Gillard. Unlike Rudd, she was consultative and dependable, albeit apparently unelectable.

Rudd’s supporters – Alan Griffin and Mark Bishop – denounced the people that brought Gillard to power as ‘faceless men’ without a hint of irony that Rudd’s own shadowy undermining campaign depends on anonymity and sourceless quotes to favourites in the media. Rudd then relied on the momentum they created in the media to finally overwhelm his opponent (ie Gillard, not Abbott).  Much was made of the likely slaughter for the ALP in Queensland in the 2013 election with pundits predicting only Rudd would survive.  Yet Rudd’s feverish campaigning in the 2012 state election for Anna Bligh had little or no effect on the election – analysts ignored this, preferring to concentrate on what they thought Bligh’s annihilation would mean for Gillard. Rudd meanwhile “zipped” around, secure in his public popularity and posing for public selfies with adoring fans.

On February 18, 2012 a strange video popped up on Youtube entitled Kevin Rudd is a happy little Vegemite. It is the first public glimpse of a Rudd many insiders knew, foul-mouthed, explosive temper and quick to blame. A few days later, he resigned as foreign minister citing attacks by colleagues and declaring he had lost the support of Gillard. With a leadership fight out in the open, Gillard calls in the heavy artillery. In an extraordinary series of public attacks, minister after minister denounced Rudd’s tactics. Wayne Swan said they were sick of Rudd “driving the vote down by sabotaging policy announcements and undermining our substantial economic successes.”

Gillard called for a ballot and Rudd delayed, knowing he did not have the numbers. The media helped again, saying that it might be a two-phase ballot with defeat followed by victory six months later a la Paul Keating in 1991. Gillard eventually won the ballot easily 71-31. Rudd retired to the back bench but the cameras followed him as he lapped up the attention. The “clear air” Gillard’s team craved never came. The media carving remained relentless and the Chinese whispers only served to add to the pollution. History repeated itself as farce in March 2013 when Simon Crean fell on his own sword in an attempt to coax Rudd out for another challenge. Rudd counted the numbers and ducked the challenge rather than lose to Gillard again. But still the sideshow went on, Rudd pumped his persona up and Labor’s poll numbers went down. In June, staring defeat in the face, Bill Shorten blinked and handed Rudd back the leadership.

There was an instant coffee effect with polls briefly returning to 50-50. But Rudd was the souffle that tried to rise twice. Murdoch’s empire was just as ruthless to him as they were to Gillard and as soon as he called the election, they openly called on the electorate to “kick this mob out“. Labor were a rabble, but it was as much Rudd’s doing as any. As Walsh wrote, Rudd “always had to be at the chaotic centre of attention, and whose needs and ambitions inevitably took priority over the interests of the government and the Labor Party, or his loyalty to colleague.” He had no workable strategy, which is why once returned, he was defeated by the most underscrutinised Opposition in Australian political history. As ever with Kevin Rudd, the collateral damage was immense, leaving Labor a broken party.  More importantly he badly failed the public. His failure to implement the “great moral challenge of our generation” leaves the next generation blaming Rudd’s megalomania as much as Abbott’s foolish policies for Australia’s climate change intransigence.

Kevin Rudd BS exposed again

The Prime Ministership of Julia Gillard rolls on after another extraordinary day in Australia politics. Regional Australia Minister Simon Crean fell on his sword after his ‘circuit breaker’ call for a spill failed to flush out Kevin Rudd. In the week leading up to the vote, the party remained solidly behind Gillard while the media bought the “Rudd BS” as Mark Latham called it. Latham said Rudd’s politics were based on what he saw as the “whatever it takes” culture instilled in the party by 1980s number’s man Graham Richardson.

Latham was never a fan of Rudd, but he was right the former Prime Minister always had a healthy dose of whatever it takes, hidden only slightly behind his very thin skin. A few days ago he used the bravura of a St Patrick’s Day speech to make an Ides of March declaration “I will challenge…”.  The pause that came before the rest: “…any of the Liberals present to claim to have a greater Irish heritage than me” hid the real punchline: It was Gillard’s job he was challenging for.  But just as Rudd’s Irishness is fake, today he proved he was no Cassius either.  After consulting his backers, he realised he didn’t have the numbers again and decided not to contest the ballot.  In a media statement, Rudd painted his decision as “honouring his word” not to challenge.

And so Gillard won her third ballot as leader, the two unopposed ballots sandwiching her one direct victory over Rudd last year. Television screens which boasted ‘non-stop coverage of the Labor leadership’ fixed on the sombre Prime Minister as she faced the Canberra press gallery after the vote. Over the constant whirring and clicking from photographers, Gillard said she would make a statement but would not take questions today, because “there is very much work to do”.

Gillard thanked the caucus for its continued support. She accepted it as Prime Minister and Labor leader, not because she sought office for its own sake, but to help Australia meet it challenges. Gillard repeated they had a lot of work to do to ensure “jobs and opportunity” and to ensure they were “getting ready for the future”.

Gillard outlined the Government’s purpose: implementing the NBN, rolling out Disability Care, fighting cost of living pressures, and above all increasing access to “world class education”.   Gillard said the leadership battle was settled in the most conclusive way possible. “It has ended now.” Gillard said they would be getting on with the job “in a few minutes” and handed over to deputy PM, Wayne Swan, also re-elected unopposed.

Swan said there was strong support for the PM in the party room. “This Prime Minister is a tough leader, and a leader who is a great champion for our country and for the reforms that are required to create future prosperity,” Swan said.  “Today’s result does end these matters once and for all.”  Swan like his boss, ended with the promise to get back to work. After all, he has a budget to prepare.

Expect this mantra of “work” to be used a lot in the coming months as Labor clears the decks for the September election. But don’t expect the press gallery to pay any notice. Joe Hildebrand set the tone for things to come with a vicious attack on Gillard’s regime, outing himself as a Rudd supporter in the process: “For an electrifying few hours this week there was the tantalising prospect that Labor was not hurtling towards certain oblivion and there was a chance, however remote, that it might actually win the next election on the back of a resurgent Kevin Rudd.”

Hildebrand was right about the disaster of Rudd’s panicked overthrow in 2010 for which Labor is repenting at leisure. But putting Rudd back in now would be beyond panic. Electoral defeat in 2013 is still the likely outcome for either leader, given the polls and the contempt of the press gallery. Yet today’s events only show how much Rudd is still detested in the party for his overwhelming ego and his chronic failures to consult as leader.

Shitstorm: The Rudd Government’s response to the Global Financial Crisis

The Germans, in their infinite wisdom, chose the word “shitstorm”  as their Anglicism of the Year in 2012. Their jury defined shitstorm as a public outcry in which arguments mix with threats and insults to reach a critical mass, forcing a reaction. Shitstorm, they said, filled a gap in German vocabulary “through changes in the culture of public debate.”  As ever, the hugely influential urban dictionary has a more pithy explanation calling it a “gigantic cluster fuck”.  The 2010 book Shitstorm: Inside Labor’s Darkest Days by Lenore Taylor and David Uren is about the gigantic cluster fuck that was (and remains) the Global Financial Crisis.  Taylor is one of the country’s most respected political journalists while Uren has written on economic issues for 35 years so they team up well to discuss how the shitstorm of the GFC impacted Australian politics and the country’s economy.

The book takes its name from a quote then-Prime Minister Kevin Rudd used in a television interview. On March 8, 2009, Rudd appeared in front of a live studio audience on the Seven Network’s Sunday Night program where he about his government’s response to the GFC. Responding to opposition claims about the debt Labor created to fund its stimulus package, Rudd said it came down to a choice between letting the market fix it up or intervening with temporary borrowings. “People have to understand that,” Rudd told the audience, “because there is going to be the usual political shitstorm – sorry, political storm over that.”  It seems reasonable to believe it was choreographed error from Rudd who left very little to chance during his tenure as Prime Minister.

shitstormError or not, the choice of words was typical Rudd. The cover of the book Shitstorm shows a picture from that era with the four members of kitchen cabinet: Rudd, Linday Tanner, Wayne Swan and Julia Gillard.  In the photo Rudd has his back to the camera. He is not interested in us, he is conducting his orchestra. But his players are not quite in tune. Finance Minister Tanner is looking off to right, Treasurer  Swan is looking off the left and only Rudd’s deputy is looking vaguely in his direction, but with her own agenda. The gang of four formed the Strategic Priorities and Budget Committee (SPBC) that made most of the political decisions in the periodm any of which were remarkable and still-debated. It resulted in Australia avoiding a recession, when the economies of the world fell like ninepins around them.

Rudd was spot on about the shitstorm, but could not see he would be one of the casualties. His sensational sacking as Labor leader happened after the book was released. No one, least Taylor and Uren saw it coming. Then again neither did anyone else outside a small circle. The panic-stricken parliamentary putsch in June 2010 that cost Rudd his job as first-term Prime Minister left the Australian polity reeling, locked the nation into costly backflips, and severely damaged the trust between Labor and many of their own supporters that lasts to this day.

The Gillard government scraped over the line in October 2010 thanks to the negotiating skills of the new leader. But to win that election, she had to promise no carbon tax although both parties had agreed to it in 2007.  The distant drum of the US sub-prime mortgage crisis had little effect on that election. It wouldn’t affect Australia where interest rates  had risen 10 times in a row due to mining growth.

Both leaders knew the crash was coming but Rudd couldn’t risk talking about a crisis as it would highlight their inexperience while it was also inconvenient to Howard’s “don’t risk good times” message.  Labor won but there was little time to celebrate.  The first effect in Australia was the cost of borrowing money. The big banks who manage lots of short term loans were suddenly exposed as money fled the banking system.  No Australian bank had to close its doors but there were times when the queue was down the street (prompting banks to consider how to keep large queues inside).

As the cost of money rose, the Australian banks took the near unprecedented step of rising interest rates without a signal from the Reserve Bank. The first bank tipped off  Treasurer Swan in advance but the next one didn’t.  So Swan advised people to switch banks but he could well see there was a problem brewing.  While n summer holidays at Cotton Tree beach on the Sunshine Coast, he took a call from US Treasury Secretary Hank Paulson that terrified him. Paulson said the US “might be able to see a way” through the crisis if house prices didn’t collapse. Swan could see it was a big if.

It was first items of business when Rudd returned to work after Christmas. Labor (or rather the SPBC) promised a budget surplus of $18 billion (around 1.5% GDP). But although China ate up Aussie minerals elsewhere the news kept getting worse. When Rudd went to Washington in March, he met the IMF’s Dominique Strauss-Kahn who stunned him by saying the sub-prime lending mess would cost a trillion dollars (a figure later upgraded to $3 trillion). Governments would ultimately bear much of that cost.

By May budget in 2008, Swan was under pressure to abandon $47 billion of election promise tax cuts. The Government held firm but had to hold back on cuts they hoped would keep the books in the black. This was a direct result of the growing crisis but Swan couldn’t publicly admit this, for fear of impacting consumer confidence.  Matters spiralled out of Swan’s and consumers’ control in September 2008 when the US’s fourth largest investment bank, Lehmann Brothers went bankrupt with $613 billion owing on uncertain assets.  Trillions in securities across the world guaranteed or counter-signed by Lehmans were now suddenly at risk. The US’s largest insurer AIG’s shared dipped 70% with $550 billion tied up in sub-prime mortgages . Largest US mortgage-lender Washington Mutual’s shares also nosedived and exposed mutual funds who had to dump securities to meet a run on redemptions. The bond market died as no one would lend for anything longer than one day.

Australia  had $800 billion of debt, of which $500 billion was short-term subject to constant finance.  As America’s financial wobble threatened to tsunami across the Pacific, Swan’s message to the press was simple: “We were not immune but better placed than most to weather the coming storm”. But an IMF meeting in Washington in October 2008 would tell him the climate was worsening: it was enough for a clean bank to have links with a toxic bank for it to be in trouble. China’s boom would not save Australia from this tempest.

Swan came from the meeting convinced Australia needed financial stimulus. Rudd quickly warmed to the idea too. Over Christmas Rudd had been reading the economic ideas of EG Theodore and his bitter regret over how Australian lack of government action delayed a recovery in the 1930s Great Depression. Rudd was not about to let it happen again. Panicky people had salted $5.5 billion out of Australian banks in ten weeks since Lehman went bust, and second tier banks like Suncorp and Bankwest were at risk of collapse.  Rudd guaranteed all term wholesale bank funding and retail deposits. Mortgagees like Challenger Howard were not protected. In two years the four big banks  increased their home-lending share from 60 to 85% .

While the SPBC was  arguing over the size of a stimulus, it was startled by the news the Reserve bank had dropped interest rates by 1%. This was twice as much as Treasury recommended. Rudd had learned the lesson from Treasury relief package model which was to ‘go hard, go households’. The SPBC would also double Treasury’s recommendation with a $10 billion package –  $8.7m in  cash handouts and $1.5m was spent on the First Home Owner Grant. There was also $6.2m to build a green car. Rudd’s message was they were ‘deploying the surplus’ to secure the economy. Opposition leader Malcolm Turnbull was so shocked, he gave immediate bi-partisan support.  Labor’s own cabinet was equally in the dark about the proposal and unhappy about it. Rudd blamed the need for speed and ‘extreme market sensitivities’ but his downfall can be charted to this decision.

Meanwhile, the IMF predicted the world economy would stagnate in 2009. The stimulus kept Australian tills ringing through Christmas but business confidence was at a record low. The Government pushed hard to strengthen Howard’s G20 as a forum to make global recommendations. They were supported by the Americans who saw the G8 as too happy to install euro-centric banking controls that were anathema to the Bush Administration. In November 2008, the IMF told the G20 they needed to fund a stimulus in the order of 2% of GDP.  This was huge, yet they were underplaying the situation. The IMF knew any higher recommendation would ‘scare people to death’ as its chief economist Olivier Blanchard said. Countries took notice and even mighty China announced $600b Keynesian spending on infrastructure projects

Yet it put the Rudd Government in difficult political territory. Spending would ease unemployment but it would kill their promise to fund a surplus. Rudd and Swan refused to say the word deficit for months until they finally admitted it was temporary. The linguistic games showed frustrated ministers that Rudd’s office had centralised decision making to an unacceptable level.

Rudd went on with the spending plotting a large-scale construction program to keep up emplyment. Schools were chosen because they didn’t need much lead time or lengthy council planning approvals. The $16.2b Building the Education Revolution program was soon supplemented by a $6.6b social housing program and $2.7b on a solar installation package. Labor lalso needed a quick ‘sugar hit’ and gave another cash handout of $8b  designed to keep  money circulating. The total package was 2.4% of GDP in the first year, beyond the IMF measure but reduced to 1.8% in 2010-2011. By the second package in February 2009, Treasury was predicting Australia would avoid a recession. It was a magnificent achievement but there were serious flaws. The solar rebate was so high, it led to huge demand and shonky work practices that had fatal results.

As well as the surplus, there was another  major casualty of the downturn – Rudd’s emission trading scheme, in Ruddspeak, the Carbon Pollution Reduction Scheme. It was due for 2010 but Government agreed to delay by a year to include extra compensation Labor called a ‘global recession buffer’. Rudd decided to get his new “browner” plan through the Senate with the help of the Liberals rather than with the Greens who wanted tougher action. Opposition leader Malcolm Turnbull was supportive but undone by deep divisions in his own party. The eventual compromise with Labor was torpedoed by Liberal hardliners led by Nick Minchin and a spill led to the surprise election of Tony Abbott as leader in December 2009.

Abbott immediately turned his back on the CPRS, leaving Labor stranded. Rudd was so sure the Liberals would support it, he had spent no time selling it to the public. It would be impossible to run a double dissolution election on a complicated scheme that to Abbott was a “great new tax on everything” . The failure of the Copenhagen climate change talks in December was the nail in the coffin and Rudd delayed the ‘great moral imperative of our time’ to 2013.

As Taylor and Uren’s book approached deadline,  Labor’s three-year-long polling honeymoon was over and they were running neck-and-neck with the Liberals. The media were hammering them over their stimulus plan failures. Rudd axed the installation scheme and Minister Peter Garrett  became the scapegoat. Meanwhile the audit office found a colossal amount of waste in BER  including substandard work and inflexible design. The budget surplus was a mirage and the Government had troubling selling its economic message for different reasons than before. During the height of the crisis, minister could not be frank for fear of damaging confidence, now they couldn’t sell the recovery because it would draw attention to the spending issues.

To Rudd and Swan’s immense credit, they saw the GFC coming earlier than most. They acted quicker than most and deeper and with the help of the Reserve Bank and China, Australia emerged almost unscathed. Abbott ridiculed 25 months of Whitlamesque spending’  but  Rudd saved the country from years of austerity with his infrastructure stimulus. What neither he nor anyone saw was that Australia would recover so quickly. His  successor Julia Gillard suffered in the 2010 poll but held on with a debt burden that would cripple Australia’s ability to implement real change in the difficult decades to come. As Taylor and Uren concluded, the political shitstorm would be ‘wilder and more damaging that Kevin Rudd ever imagined’.

Julia Gillard’s Day Zero

No one seems to accept this as a possibility yet but Labor may well have won the next election today. Everyone does agree the Federal Government has been through the most extraordinary two weeks of bloodletting – not so much airing its dirty linen in public as proudly wearing it at a fancy dress party. From Simon Crean’s early promptings, to the mysterious airing of Rudd’s sweary video, the revelations of the Four Corners program of what Gillard did and did not know, Rudd’s overseas midnight resignation, the ferocious response of Government Ministers and Gillard’s ultimate triumph today, it has been gifted wrapped coverage for our media. Hundreds of journalists were in Canberra today for the vote which was a foregone conclusion. Yet not one of them picked up in advance the biggest story of the day – the resignation of Mark Arbib. It was this action as much as anything that shows the length Labor may be prepared to go to kill the leadership debate and end the political drama.

Along with fellow minister Bill Shorten, Arbib was behind that drama. He was the ultimate face of the faceless men who deposed Rudd in 2010. With senior minister Nicola Roxon admitting on the weekend she was unaware of the impending coup, it was Arbib and Shorten who Rudd would have considered the backstabbers-in-chief. Given he has not forgiven the party for his sacking, it is not beyond the possibility Rudd demanded a faceless head as his price for supporting Gillard post ballot. Certainly Arbib’s confusing resignation statement hinted there was something a lot stronger at issue than the “family reasons” offered as the main cause. And as a Senator he could leave without Labor facing a by-election.

Meanwhile Kevin Rudd seemed at ease after the ballot today. Perhaps he has exercised some of the demons of his 2010 defeat which occurred without a ballot. The initial reports were that he had just 29 supporters in caucus but it was soon revised to 71-31. This was a margin that seem to please everyone in Government. Gillard was handsomely re-elected with over a two to one majority. Meanwhile Rudd was not disgraced (those two missing votes getting him into the respectable thirties) without getting the 40 or so votes he needed for the legitimacy of a second challenge to the leadership. His speech afterwards was both valedictory and apologetic. He stood up for a belief in his achievements but acknowledged others saw it differently. Most importantly he saw the need to commit to Gillard for the life of her Government, effectively ending his leadership challenge until either she retires or is beaten at the polls.

This was also a coded message to the media: he was off the drip. With no other senior minister with a serious axe to grind, there should be few further leaks of the kind that has destabilised the Gillard regime from the moment it took office. The media will keep Rudd on the preferred prime minister poll question as they do Malcolm Turnbull. But just as they do now with Turnbull, Rudd leadership stories will run short of juice without a quote from a “Senior Government Minister”.

The similarities with Turnbull extend beyond this. Both men are brilliant intellectuals but brittle and difficult to work with. Both have probably burned their bridges with their caucus colleagues and may have to set up a third (or fourth) party if they are to ever re-establish their leadership credentials. Rudd in particular is damaged goods. The Australian hailed him as Labor’s best hope to defeat the Coalition in 2013, but his clear lead in the preferred prime minister stakes was in stark contrast to the respect in which he was held by the vast majority of caucus members.

It is the difference between having to vote for him and having to work for him. Rudd has mastered a media image of the socially incompetent nerd. It doesn’t appear to matter to voters he hasn’t a shred of genuineness in him as long as he is there with that smile to crash or crash through any awkwardness. Behind the scenes, other parts of his personality were free to do their ugly work usually far from public prying. 24 x 7’s Kevin’s obsessive desire for control, glass jaw and an enormous untrammelled ego led to an unhealthy work environment that any self-respecting OH&S officer would complain about.

While the self-styled “K Rudd” now sits chastened on the naughty back bench, Prime Minister Gillard seemed positively ebullient post-ballot. The all-out attack strategy was risky but necessary to kill off her challenger. She has given Abbott his election ads but they will probably be lost anyway in a tasteless and bland stew of negative messages. She also fended off Abbott’s Question Time attack today with ease making him look like a carping yesterday’s man while she was the forward looking leader. Such decisiveness may not last but it at least she can now attack without having to protect her flanks.

These two weeks have told us where the corpses are buried but so far the public is not bothered by the macabre spectacle. Indeed Labor got its best result in 12 months in the latest Newspoll today. The two party preferred is 53-47 to the Coalition which is in the margin of error for 50-50. It seems the punters don’t seem to mind the blood-bath when they can see exactly who is throwing the punches. It is also a reminder of the old mantra that when it comes to a vote “It’s The Economy, Stupid”. The Coalition remains all over the place in its economic policy in a time when Australia is in a relatively good position. Abbott’s policy-free zone was a safe bet only as long as Labor continued killing each other. Gillard’s win may not yet have given her clear air, but the fog of war has just got a little less dense.

A Very Australian Coup

Julia Gillard has been Australian Prime Minister now for almost two weeks and the mutterings have begun about whether she is the right person for the job based on her mining compromise and her apparent willingness to sacrifice refugees on the barbecue of marginal outer Sydney electorates.

But few people in Australia have questioned her right to be Prime Minister. Despite the very presidential style of modern elections, it is MPs that people vote for and these MPs can decide who leads them, and therefore the country. The media, so wrapped up in the exciting specifics of the overthrow, accepted the legitimacy of the practice without a murmur as “the Westminster system”.

In her first media conference as Prime Minister, Julia Gillard acknowledged she had not been elected Prime Minister by the Australian people. “And in coming months I will ask the Governor-General to call for a general election so that the Australian people can exercise their birthright to choose their Prime Minister.”

But despite the oft-repeated media narrative of her need to get a “mandate”, Gillard never once mentioned the word in any of her early statements. Merrion Webster defines the word mandate in this context as “an authorisation to act given to a representative”. According to that definition Gillard has all the mandate she needs, having been elected unopposed by her party with the backing of powerful union bosses.

But if the Australian media are mostly sanguine about this turn of events, opinions are more uneasy overseas where the Westminster system has less sway. US papers called it a party revolt and a mutiny. Craig McMurtrie from the ABC’s Washington bureau said a Washington Post columnist though it looked disturbingly like a coup d’etat. The Americans are right, of course. Sure, there was no blood spilled or tanks on the lawn. Nevertheless Gillard’s ascension shares this in common with coups more common to South America, Asia and Africa: it was ruthless overthrow of a country’s elected leader without the consent of the people who elected him.

Here in Australia we have been blinded to this fact by its commonness at State level where many premiers, most recently Kristina Keneally have been elevated into office by the backdoor. It is also common at the Federal Opposition level with both Labor and the Liberals changing their leaders many times in the last ten years when out of power. But it is surprisingly rare at the highest level of Government. Only twice has an Australian Prime Minister ever been dumped by their own party while in office – Gorton for McMahon in 1971 and Hawke for Keating in 1991. The 20 year symmetry wasn’t quite there for Kevin Rudd but the brutal machinations of backroom party politics were reminiscent of past coups. Even Gillard’s own Party has not yet caught up. The Australian Labor website still goes by the name of www.kevin07.com.au

Meanwhile Opposition Leader Tony Abbott came out with a curious denunciation of the coup. He called it a political assassination (though Rudd may yet rise from that particular death) and an “ugly process” and said “Prime ministers should not be treated in this way.” Presumably Abbott must think it is ok for Opposition leaders to be treated that way.

Though he probably has no intention of doing anything about it, Abbott is essential correct in his criticism. Prime Ministers should not be appointed out of backroom deals and there is no reason it cannot be changed. The Australian Constitution is silent on the matter of Prime Ministers and what exists are conventions that supposedly “assist the smooth operation of the legislature.”

Smooth doesn’t begin to describe the operation to depose Rudd. But it is easier to describe the shock, distaste and a sense of powerlessness among the wider public (despite goodwill to towards Gillard). That is not good for democracy. It is time for people power to assert itself and insist that the Prime Minister they elected is only removed when they say so.

Being Julia Gillard: Understanding Australia’s new prime minister

In Jacqueline Kent’s book The Making of Julia Gillard, Gillard herself tells a story of an event that took place in Hopper’s Crossing outside Melbourne, Victoria. She was at a shopping centre standing next to a board with a photo of her. “This old guy comes out of the supermarket, looks at me, looks at the photo, then turns back at me and says ‘Taken on a good day wasn’t it, love?’. I said “And you’d be bloody Robert Redford, would you mate?’”

Gillard’s self-deprecating sense of humour is one of the crucial skills she will need to have at her disposal after her stunning accession to the Prime Minister of Australia this morning. Most people believed that Gillard was destined to become the country’s first female Prime Minister but until a few days ago no one would have believed it could happen in 2011.

But with Kevin Rudd in disarray in recent weeks and private party polling clearly telling powerbrokers they were heading to defeat in a number of key marginal seats, it was suddenly time to up the tempo. Unlike Rudd and his opposite number Tony Abbott, Gillard had kept her personal popularity in the recent political upheavals. The time was right for the kingmakers to dust off the guillotine and depose the incumbent. Rudd realised overnight he no longer had the numbers and resigned without a fight this morning.

That outcome is the best possible given that the leadership spill happened. Labor has panicked unnecessarily and would have won the next election under Rudd but by terminating his leadership they have handed an unexpected fillip to the opposition. At least the clean nature of the execution means there is no residual leadership tension that could further undermine Labor. Indeed given Rudd’s stated intention to stay on, it is not beyond the realms of possibility he could be restored as Foreign Minister under Gillard after the election.

The focus is now on the new leader. Gillard was born in the South Welsh coal port town of Barry in 1961. Her father was a brilliant student but being one of seven children in a poor family he was forced to end his education early and work in the mines. When the four year old Julia was diagnosed with bronchial pneumonia, a doctor advised her parents to move to a warmer climate. The family (including elder daughter Alison then aged 7) moved to Adelaide in 1966 where Julia’s father worked as a psychiatric nurse.

Gillard said she left the value of hard work from her father. In her Adelaide University years she was an organiser with the Australian union of students and then involved with the Melbourne-based Socialist Forum. Political views were heavily skewed in the ultra-left scene of 1970s student politics. Gillard told Australian Story that being a Labor student “you were viewed as a right-winger, I mean, we didn’t really have that many sort of Liberals who were active in it to create that right-wing pole so most of student politics thought the Labor students were the enemy for being too right-wing.”

Gillard graduated from the University of Melbourne with an arts and law degree. She worked her way up to a partnership in Melbourne legal firm Slater & Gordon before several protracted and unsuccessful attempts to secure Labor preselection during the 1990s. She gained crucial government experience in her role as chief of staff to John Brumby when he was state opposition leader in Victoria during the Kennett years and she was finally elected to federal parliament in 1998.

ABC Radio National’s Peter Mares said that Gillard’s membership of the Victorian left of the ALP was “more organisational than ideological.” She is keen to promote social inclusion but wary of government heavy-handedness in social policy. “Gillard supports approaches that combine state and non-state actors in service delivery, encourage competition and individual initiative, yet maintain a safety net for those who fall,” Mares said.

Biographer Christine Wallace agrees Gillard is “no lefty” and said she is factional only so far as it is useful. Wallace described her as “transfactional” and said Gillard elicits an “intense, visceral response from voters, journalists and fellow political players.” Her talent was nurtured by Brumby, Simon Crean and Mark Latham. Gillard was one of the few Labor heavies not to suffer a tongue-lashing in the Latham Diaries and in return she is one of the few leaders not to twist the knife in Latham. By the time Rudd took over, Gillard was the obvious choice of deputy and since the election victory in 2007 she has revelled in the difficult twin roles of education and employment minister.

Wallace said what distinguishes Gillard from many female politicians is a genuine love of power. “Possessing it acts as a big political multiplier for her: the more power she gets, the better she performs and the more she accumulates as a result,” said Wallace. Gillard has now hit the jackpot when it comes to accumulation of power.

Her immediate task is consolidation to ensure it doesn’t just last a few months. But assuming she wins the 2010 election, we may see a new style of leader never before witnessed in Australia. Her policy record is mixed, but her native intelligence, a driving will to succeed and her indefatigable sense of humour will prove major allies in the fierce battles to come.